Charter Bids Billions for Time Warner Cable

Charter Communications bids billions in its attempt to acquire Time Warner Cable. The last meeting was Dec. 27 and Time Warner informed the company it could be bought for $160 a share with $100 cash and $60 in stock with a 20 percent collar. Time Warner is not interested in anything below that.

Charter is the fourth largest TV cable company behind Time Warner Cable, which is in the second spot behind Comcast. Charter Communications is offering more than $60 billion for Time Warner Cable and they’ve made this offer or bid public. The full letter was disclosed and their hopes are that the shareholders will take into consideration this offer and what the two companies can do together. This possible merger or consolidation would bring together pay TV and Internet companies totaling 15 million customers.

Charter chief Tom Rutledge thinks joining the companies will create value for shareholders and employees of both. Time Warner Cable received the offer, but declined comment earlier today.

Charter Communications has shareholders, including Liberty Media. John Malone, billionaire and philanthropist, is chairman of Liberty Media and his desires, along with other executives, are to have fewer providers in the country. A move like this could be successful with the industry going forward quickly in this digital age. This would leave a stronger hold for the companies purchasing digital material from suppliers.

Time Warner Cable lost one million pay TV subscribers in 2012 when they lost programming for a month over a dispute with CBS Corp. The network was unavailable for those subscribers and so many customers left at that time. The competition from others to buy Time Warner Cable has driven up shares of the cable company since last March, which have risen 15 percent over six months.

Charter made the bid public after the market closed today, bidding billions in an open letter to Time Warner Cable. The company offered $132.50 per share, with $83 cash to the larger cable company. The market closing price for Time Warner Cable today was $132.40. Charter is hoping to strike a deal and Time Warner Cable wants more. But should they drive them away, they would need to fix their speed and company to keep it competitive. Time Warner Cable is headquartered in New York City, and was founded in 1989. Its CEO is Robert Markus, and the cable company employs 47,300 employees.

The letter, in which Charter bids billions for Time Warner Cable, notes that the two cable companies have discussed merging since June of 2013. Rutledge is prepared to go forward and negotiate until an agreement is made. Then he will go to the shareholders, as he has procured financing for the whole deal. He wants it expedited as “time is of the essence.”

Later today, Time Warner Cable replied and told Charter the price was no good. Charter, with its four million viewers, and Time Warner Cable with its 11 million, combined they would total 15 million subscribers. Since the letter and the talks, Charter shares rose 70 percent since a year ago and Time Warner Cable 30 percent. Charter has said now it’s time for the shareholders to listen and decide. Charter bids billions for Time Warner Cable but what will happen now?